Fitch Ratings gives KKR an “A” for its long-term issuer default rating

Fitch Ratings rates KKR long-term bonds at “A”

NEW YORK — Fitch Ratings said Monday it has assigned an “A” mid-level investment-grade rating to global asset manager KKR & Co. LP, with a stable outlook.

Fitch assigned the long-term issuer default rating to the parent of private equity firm Kohlberg Kravis Roberts along with its KKR Management Holdings LP and KKR Fund Holdings LP units.

Fitch said the ratings reflect KKR’s global position, its management team’s experience, solid track record in its investments and its large institutional investor base. Fitch also noted the company’s predictable fee-earning capabilities, reflecting its large fee-paying assets under management, and the potential for significant incentive income.

The rating is weighed down by KKR’s “key man” policies, which would take effect if key employees such as co-CEOs Henry Kravis and George Roberts, and certain other senior executives, were to leave the firm. The policies generally prohibit the company from accessing uncalled capital once a “key man” event has occurred for a limited period of time while the limited partners decide whether to reduce their uncalled capital. However, Fitch noted that KKR’s “key man” policies aren’t as punitive as those of some asset management firms, given that the policies don’t give the partners the right to liquidate the funds.

Fitch said it could downgrade its rating if KKR’s investment performance declines and the company has difficulty raising funds or generating fees. Conversely, an increase in fund and fee diversity and debt reductions could warrant an upgrade.

KKR shares debuted July 15 at $10.50 in a long-awaited initial public offering. The stock has bounced between $8.64 and $11.08 since it started trading.

In afternoon trading, KKR shares added 8 cents to $9.94.